Turkey

Don’t call us Mr. Erdogan. We’ll call you.

Erdogan urges Turkey to boycott i-phones

In the latest round of the dispute between Turkey and the USA, Erdogan says Turkey will boycott the US technology such as i-phone and buy Samsung and Turkey’s own Vestel instead. This dispute is superficially about:

Andrew Brunson, the Presbyterian pastor held in Turkey on suspicion of terrorist links (none have ever been shown or even put forward) Trump wants him back.

Fethullah Gulen Erdogan’s former friend (until 2013 when Gulen started investigating Erdogan on corruption charges.) Erdogan wants him back – to imprison him on no evidence.

In fact, of course, these two men are merely incidental characters in a Turkish tragedy.

The catastrophe that is the Turkish economy is not of America’s making.

It was caused by debt. In particular by foreign debt. If I borrow $1 from you and you give me, say, 1 of my currency (let’s call it lira) then I owe you $1 dollar or 1 lira. Fine. But if, over the next few years or so (partly because I owe you) the value of my lira falls so that it’s eventually only worth 50 cents, then, of course, I now have to pay you back 2 dollars to repay the loan. Simples! And that is what has happened to Turkey – it has borrowed very large sums of money – around $250 billion – in dollars and euros which are both now worth roughly twice as many liras as they were when the loans were first made, so Turkey cannot pay its foreign currency debts so its Lira falls in value even further, right down into oblivion (or rescue). Its currency has already fallen by 40% this year and 7% in the last week alone.

Boycotting i-phones is a smart move if you want to help Turkey step back into the dark ages.

It was Facetime, the Apple owned app, that Erdogan used to appeal to his followers when defending against the coup attempt in 2016 – perhaps he’ll use it again now to call for a boycott of Apple?

Just to give a little perspective here, Turkey’s GDP is estimated at $851 billion. Apple’s market cap is around $1000 billion –

Apple is worth more than Turkey.

Mr Erdogan thinks he can ignore the markets and ignore the tide of economics that is rising inexorably against him. He should learn from King Canute, but he won’t.